Wealth Accumulation

[Koolau]

While I can't recall all the booze I drank (teetotaller now), i went through three women (one live in, two wives) and a dozen or more motorcycles over the years. I'm on the right path now......

Even my old friends don't recognize me anymore.

I'm outliving most of my friends. Must be 'cause I gave up most of my bad habits early.

 

[latexman]

I started working at 15.5 years old. During high school, I had a full time job (cook) after school, and had two jobs every summer. With scholarships, my savings, and usually two jobs every summer, I got a BS in chemical engineering. I married before my senior year in college. My wife had/has a similar work ethic. We didn't max out the 401k, because we both had, and got, pensions. With the company match and our contributions, we put about 15% into the 401k each year. That worked well. We had 1 kid and adopted 4 more. Today, none have any school loan debt. We cash flowed whatever their scholarships did not pay. Now, we have a NC home, a FL condo, 2 pensions, and a decent nest egg. Wife starts SS in Jan. 2024 on her record, and I will claim SS at 70 (2027), when she will claim for spousal. Once all revenue streams kick in, we'll either start saving again, or BTD!

 

[Cat-parents]

I did not inherit any substantial amounts when I was young, but I was fortunate to receive two small sums from my grandparents ($10K total) when I was in university. My parents also paid for my undergraduate tuition and dorm/rent cost. Combine that with the fact that I went to school in Canada (at the top university in the country, my final year tuition bill was about CAD$1800!), worked part-time every summer and sometimes during the school year and received some small merit scholarships and course prizes (about CAD$5000 in total over seven years), so I was able to start my legal career with zero debt.

For the next 15 years, my wealth depended on my earnings. I spent about seven years earning a good income at a law firm and then took a job in the government sector. My income was much lower than what my peers who became partners in law firms made, but I had better work-life balance. When I married at 40ish, I combined finances with my frugal husband, whose earnings had been much lower but who had been a good saver.

Fast forward almost 20 years, and we have a solid base of financial assets and own a home (purchased in 2018) with a mortgage. For about half of those 10 years, I was the sole income earner. I had a good 9 years at a US mega corp in an mid-level executive position (stock options, RSUs, bonuses, pension) and DH had about 9 years in a less well-paid position (but with a good pension).

When we retire, we'll have a number of pension income streams (mostly small on an individual basis but they'll add up to cover our needs but not our wants). Three small employer pensions will start paying out when we're 65 and we'll take SS/CPP at 67.

Very recently, my father decided to disburse some of my sister's and my expected inheritance "with a warm hand", and I expect to use that low six-figure sum to pay down most of our mortgage when it's up for renewal in a couple of years. That will make it possible for me to retire, I hope, sometime in 2024.

On the other hand, we expect to have to provide financial support to my mother-in-law when she transitions to a retirement home in the next year or so. So the funds received from my dad will, in effect, help us support my mother-in-law.

 

[NgineER]

Started working late compared to many. I was an exchange student to the US in high school, served in the army for a year (OUS) which was mandatory at the time. Took a year off during undergraduate studies to work for six months to save money to travel the world for six months. Did a year abroad during undergrad and applied for the PhD program in Chemical Engineering at a great school in California. Met my wife future DW at that school and finally graduated and got a real job at age 32. Invested all we had in our first home, so were really house poor. (DW had $20k in a 401k that was not liquidated).

My DW was frugal and we diligently maxed out our 401k's. DW was home for one year for each of our two first kids and in-between taught at a university (3 years total). Moved to a different state and DW retired to stay home with kids (now 4). Hit $1M net worth a couple of months after turning 40.
Bought our first rental property at 41, hit $1M invested assets a year later.
Did BRRRR (Buy, rehab, rent, refinance, repeat) strategy with first rental and have bought four more). Hit FI last year but have not RE'd yet.

Rental investments:
Total invested in rental real estate (since 2016): $250k after cash-out refi's or financing.
Net income $51k - 20% ROI (with funds ear marked for CapEx etc not included)
Principal payments - $24k annually
Equity: $728k (191% appreciation)

To summarize:
1. Not been afraid to try new things, moving to different country.
2. Chose a great DW.
3. Saving diligently for 15 years (max 401k, Roth IRA), got lucky on some individual stocks, but also burned on some, so sticking to mainly boring stuff like S&P500 now.
4. Rental properties
5. No inheritances yet, not expecting much and not counting on any.

 

[NW-Bound]

Quite a few posters got a late start, and finished quite OK.

On the other hand, I got off OK by sticking my nose to the grindstone, LBYM and all that right out of graduate school. But then, I squandered some of the good start by leaving the security of megacorps, and trying something on my own. Could have landed in deep doo-doo, if not for my cautious nature. I guess risk management is important in everything.

 

[Finn Mccool]

At age 81, I am very new to managing our portfolio. My 76 year old wife and I have always lived on our pensions, Social Security, and the RMDs of our two IRAs.

My wife inherited a 1.7 million dollar portfolio in 2003, and we also inherited a financial advisor that we assumed was competent and looking out for our financial interests. Neither assumption was true. When I first looked carefully at our portfolio last May, I was horrified. 41 stocks and 12 funds had not been touched since 2002. We fired our advisor, moved to Schwab, and I immediately started selling. 4 funds and 10 stocks had losses - since 2003! 5 stocks had sales proceeds of less than $40.00.

We’re now down to 8 stocks and 3 funds, and I will sell more next year. I’ve done multiple spreadsheets so I finally have a good handle on our financial life. Thanks to my wife’s parents, the portfolio will provide 52 years of RLE. Since we have no heirs, it is mostly insurance for future long term care. Thankfully, we are currently in good health.

 

[NW-Bound]

My wife inherited a 1.7 million dollar portfolio in 2003, and we also inherited a financial advisor that we assumed was competent and looking out for our financial interests. Neither assumption was true. When I first looked carefully at our portfolio last May, I was horrified...

From 2003 to 2022, you and your wife did not look at your portfolio? I guess you really trusted the advisor.

 

[kobedog]

Graduated from college in 1983 with a EE degree and student loans. Took a job with the Department of Navy as a civil servant and worked there for 34 years. Student loan interest was 12%, so my Dad paid it off and I paid him back at 8%! Saved some money for first house in 1989, but instead purchased fifty percent ownership with brother of 144 acres of young timber property in Oregon for $35K (my share). Now my share is worth over $1M and it's ready to start logging. Married DW in 1990 who was also an engineer and understood LBYM. TSP (Federal 401K) grew steadily with a few blips along the way so I could retire at age 56. DW retired two years later from HCOL area. Recently received a $200K inheritance which is about 5% of NW. 2 kids have been landed for 2 years or more with degrees and without student loans. Portion over $1M in TSP G fund and over $1M in C,S and I funds plus $350K in Vanguard ETFs. We are self insuring LTC so that's why we have so much in G fund.

 

[Finn Mccool]

From 2003 to 2022, you and your wife did not look at your portfolio? I guess you really trusted the advisor.

Well, yeah. He had been my in-laws advisor and the stock picks made by my father in law were mostly solid companies. I think the high fee, high load mutual funds were bought by the advisor to increase his income. Mostly though, we did not need the portfolio for our living expenses. It's unfortunate that it took me over twenty years to figure it all out, but fool me once, shame on you, fool me twice, shame on me.

We would have done MUCH better if we had transferred the entire portfolio to a discount broker, sold everything with no capital gains, and bought low fee index funds, but we still are very okay financially.

 

[ut2sua]

I'm outliving most of my friends. Must be 'cause I gave up most of my bad habits early.

Hawaii's great climate and clean air have wonderful impact on one's health, no?

 

[pletal]

For those who to care to share, retired or not, how did you accumulate your wealth? (Use your definition of wealth) Working for the man at (mega corp(s), owned your own business, inheritance, gifts, investing, lottery , etc.. Or some combination or other source.

For me, even though I received a rather large inheritance well after I retired, I accumulated the majority of mine simply working for a mega corp "and" contributing/investing the max amount to the companies matching 401k for ~30 years. Pretty simple, IMO.

So for the younger folks on this forum, you can accumulate a good chunk of money (even millions) as a worker bee, as I did. I don't think I'm an exception or a rare case. Just steady work, saved, invested (conservatively), took advantage of things like a companies matching 401k, (that is a big deal over 30 years), etc. Of course getting a well paying job helps.

Anyone else care to share their wealth accumulation story?

My story goes like this. Saved 20% of my take home pay (at least) for the last 41 years. Never spent it. Wife worked for HD starting when they had 6 stores. She did that for over 25 years and saved 30% of pay. Rather boring. Did pay off home in 12 years and never moved. Had a business that did well and avoided lifestyle creep. That may be the biggest item of all. Some people forget that $1000, $10,000 dollars is slot of money. According to those who tell us where we stand, I may be in the 1% group. It’s very hard , and that may be good, to change your spending habits if you have been frugal your whole life.

 

[NW-Bound]

Hawaii's great climate and clean air have wonderful impact on one's health, no?

There may be something to that, although we need further statistics to separate the natives from the transplants. If you wait until 70 to move to Hawaii, well, it may be too late for you.

Using federal data from the Centers for Disease Control, Bureau of Economic Analysis and the Census Bureau, Life Extension, a vitamin and supplement company, found that Hawaii has the highest overall ranking of all states with a life expectancy of 80.7 years...

The U.S. life expectancy overall has declined two years in a row to 78.5 years.

 

[F.I.R.E User]

Mega corp, side hustles, index funds.

 

[roenie64]

Worked, saved and real estate

My husband and I both worked full time jobs. We always saved money each month in addition to our 401ks. We considered it one of the bills that was paid each month (we wanted to semi retire early) . In addition, we saved money to buy a vacation rental. We managed it ourselves and reinvested the profit to buy additional properties. Today, we do not work our regular jobs, but we manage our 5 vacation rentals which provides a nice income (plus we have the equity in the houses).

 

[RobLJ]

Like many here.
Went to grad school in Cali, married a girl from the Polish slums of Philly who got her accounting degree at Cal Poly (soon to be 40 years of marriage).
After getting a tenure track job at Univ Houston-Downtown with two young sons, we were negative wealth, but had 401k and 403b with a match, which we invested every year for 25 years.
Suddenly after the boys graduated, and after 25 years and paying off the Houston house, we were able to retire.
Rebalanced the mutual fund allocation every year or so until late 2005 when I was fearful of a housing collapse like the one I had seen in the Southwest Savings and Loan collapse, so shifted from 95% stock funds to a 65-35 allocation and before that had shifted a big chunk of large caps to mid/small caps in 2000. Got lucky twice--timing usually doesn't work, unless it does. I've used up my crystal ball, though.
25 years of compounding and a match does wonders, even though the wife lost her match in the Enron/Dynagy bankruptcy (she worked for Dynegy and they required the match to be in Dynegy stock. I'm still bitter about that, but at least Congress changed the rule after the Enron collapse for others to benefit.)
No inheritance; we've been helping my parents for 15 years to the tune of 600$/month plus emergency expenses. My twin had progressive myclonic disease, so the Aged P had to quit her work to take care of him for 25 years, so no regrets about that. DW's mother died suddenly 12 years ago; we were helping her aunt as well until she qualified for SS.

 

[zippy2020]

Judging by the initial stories I've been skimming over, buttresses the professional and my personal opinions that divorce is often financially devastating to at least one, and sometimes both sides.

Not to mention the emotional turmoil, as well. If kids are involved, even more so.

My sister got divorced after 10 yrs with 2 kids, very civilized - and the ex is still a member of the "clan". But altho both recovered financially, it did set both of them back - him more than her.

She was more disciplined about saving and pushing her career forward to earn more. I'm not sure she would have gone after her Ph.D. if she hadn't been a single mom, in fact.

 

[Pointby2]

Had negative or zero net worth until I was age 40 in 1993. I had a marketing degree and DW became a pharmacist is 1989. Worked for a small company that had a LLP where I became an invested partner. Big risk, as the buy in was more than we paid for our house. A few years later they sold to megacorp and I received a $300K payout, this was back in 1999. Paid off our home invested the rest. Next year moved to California bought a $400K house that we quickly paid off, now worth $1.5million. Saved 15-30% every year and lived below our means.
Not rich, but comfortable.

 

[COcheesehead]

Judging by the initial stories I've been skimming over, buttresses the professional and my personal opinions that divorce is often financially devastating to at least one, and sometimes both sides.

Not to mention the emotional turmoil, as well. If kids are involved, even more so.

My sister got divorced after 10 yrs with 2 kids, very civilized - and the ex is still a member of the "clan". But altho both recovered financially, it did set both of them back - him more than her.

She was more disciplined about saving and pushing her career forward to earn more. I'm not sure she would have gone after her Ph.D. if she hadn't been a single mom, in fact.

Went through a divorce in my late 30’s. State has a martial property law so we each got half. I walked away with about $300,000 though I was responsible for saving almost all we had.
It motivated me to start a business. I wrote a check amounting to most of my savings to start that business. Best move ever. Today I sit on more than 20X that amount - accumulated in the 20 year period afterward.
Divorce is what you choose to do with it.

 

[yclipse]

One major factor helped to get me where I am today. Beginning in 2003, and over the next four years, I started buying shares of Berkshire Hathaway in my retirement account, accumulating 2,000 shares. I added another 500 shares in 2020, buying on the Covid dip. Best decisions I ever made.

The worst decision? A fair chunk invested in Enron in mid-2001, just in time for the fall. That was my own decision.

 

[O2Bfree]

I started saving in my late teens by maxing out an IRA every year. From age 22 to 32 I worked part time at a great teaching job, continued to contribute to my IRA, and made a couple other small investments that really didn't do very well. The teaching job earned me a micro-pension that will pay around $320/month.

During that time I went back to college, paying for a second degree myself while living within my means and not accumulating any debt. That meant sharing a house with two other women for a few years and then renting a tiny apartment when I decided to live by myself. But I was having a blast, and had a lot of free time for playing around and enough money to buy whatever toys or trips I wanted. Managed to finish my degree with a few thousand in the bank.

When I started working full-time at age 32, I began maxing out my 401k plan, plus the IRA, and also took advantage of my company's stock purchase plan and the 25% match it offered. A year later, I bought my first house on my own and payed extra on it each month.

As my salary increased, so did my savings, up to 30-40% of my income. My company eventually got bought out by a larger, more profitable company, and the stock I accumulated did quite well.

I must say I made a number of mistakes financially over the years:

• I let some underperforming 401k investments ride for far too long, naively thinking they'd take off eventually. They never did.
• I lost money jumping in on a few "hot" stocks that had already peaked and then declined.
• Also missed some opportunities to sell some underperforming stocks when they happened to surge because I wasn't paying attention to the market.
• I didn't start seriously tracking my NW until 5-1/2 years before retirement. Had I put that spreadsheet together in my 20s or 30s, I'd have probably gotten a better return.

When DH and I bought a house together, we bought what we needed—not what we could afford—and payed it off quickly. Interest rates at the time were below 4%, so maybe that was another mistake, not investing that money instead.

On the plus side financially, I never had kids (though I see non-financial downsides to that). Although DH had two from his previous marriage, and a whopper of a child support bill for the first eight years of our relationship. We also spent quite a bit on them when they stayed with us, although we didn't end up paying for their college or other big expenses.

In spite of many mistakes, I reached my retirement goal 2-1/2 years before my planned retirement age of 55-1/2. Kept working until 57 though because I was enjoying my job. Maybe that was a mistake though, because Covid hit right after I retired so most of our big plans were delayed. Really, I could have retired at 52 and been just fine, even without the modest inheritance I got at 60. I now have way more money than I ever thought I'd have, and am astounded at how much it grows each year. And that doesn't include DH's savings and pension, so as a couple we're more than comfortable. We still live frugally, but I'd be ok with blowing some dough now—just gotta get DH on board with that. Maybe blowing a little of mine will be the apple that gets him going.

 

[Car-Guy]

One major factor helped to get me where I am today. Beginning in 2003, and over the next four years, I started buying shares of Berkshire Hathaway in my retirement account, accumulating 2,000 shares. I added another 500 shares in 2020, buying on the Covid dip. Best decisions I ever made.

The worst decision? A fair chunk invested in Enron in mid-2001, just in time for the fall. That was my own decision.

I'm assuming you are buying BRK-B and not BRK-A

 

[Retired Expat]

Despite some very good years at a high salary didn’t accumulate much that way. Maybe 20% of my wealth. Another 20% from inheritance a few years back but after I had retired, but the lion’s share came from Real Estate investing. Buying and fixing up and holding as rentals which also generated income but appreciated at least as much

 

[dheb]

I had some lucky breaks, and managed stuff well.

The lucky breaks: I won a $30k literary prize when I graduated at 20 years old. I had an aunt who gave me a similar amount in utility stock in my teens. And I inherited $75k from my grandfather early in my 20s. With the literary prize, I earned a master's degree. I still own the stock (and kick myself for not reinvesting it into something more growth oriented, but I've enjoyed a lifetime of quarterly dividends). With the inheritance I bought a truck (drove it for 21 years) and a down payment on a house (sold it for a lot more than I bought it for). Career-wise, I worked for 30-ish years at a large university, and invested extra in the retirement plan, plus fully maxed a Roth annually. I always lived fairly frugally and spent less than I made, so I invested outside of retirement accounts, too. But I admit I got a head start early in life to be able to save and invest the way I did. I'm just glad I had the sense as a young man not to waste what I was given.

 

[F.I.R.E User]

What about becoming a gold digger and acquiring wealth that way?

 

[O2Bfree]

Even with the 1987 crash, early 90s recession, dot-com bust of 2000, great recession of 2008-2009, and recent covid and post-covid market gyrations, staying the course, never choosing to get out of the market, and steadily investing into it paid off.

It was also *very* beneficial to marry my DW, who had the same saving (along with spiritual and career achievement) goals as I did. It is interesting (and sad) when we look at a number of our friends who married around the same time as we did but are not divorced, primarily driven not by infidelity or abuse but from vastly differing views on finances and the resultant issues.

A couple jewels there that young ER hopefuls should notice. Over the years many people I know have said something like "the market is like betting it all on red." They don't consider how it's always come back from crashes and for some reason don't want to hear about it. It's like you're trying to sell them on Amway or something.

And the partner thing—soooo important, for ER and a successful marriage. Happily for young people today, the FIRE desire gets lots of press and there are so many tools and forums available that we didn't have when we were young, and so many young people thinking about ER that maybe it's easier these days to find a like-minded mate.